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Archive for category: SBDC News

What happens to my EIDL loan if my business closes?

Blog, Finance, SBDC News

EIDL-Payback

by Simplice Essou, CPA | October 27, 2022

Editor’s Note: Florida SBDC at USF business consultants are not attorneys. This article does not represent binding legal advice. Please consult an attorney/lawyer to discuss the specifics of your business situation.

What is the EIDL?

In the wake of the COVID-19 pandemic, millions of small businesses have received federal aid in the form of the Paycheck Protection Program (PPP) loan and/or the Economic Injury Disaster Loan (EIDL). These programs helped save many small businesses. However, despite the federal assistance, many others did not survive. Business owners who were forced to close their doors may be asking themselves if they are responsible for the debts contracted through the EIDL program.

The EIDL is intended to help businesses meet financial obligations and operating expenses that could have been met had a disaster not occurred. For example, a business owner whose business got shut down due to COVID-19 restrictions could potentially qualify for an EIDL to help cover expenses such as rent and working capital (equipment repair, inventory, etc.). For-profit borrowers under the EIDL program could get a fixed 3.75% rate, while nonprofits could get a 2.75% rate. Borrowers have up to 30 years to pay the loan back.

Whether a loan guarantee was needed for the EIDL depended on the amount of the loan. For an EIDL of $25,000 or less, no collateral or personal guarantees were required. That means that for the vast majority of defaults on these small loans, business owners’ personal assets will not be at risk of seizure. In the event of a business default on a federal government loan, the lending financial institution may report the default to credit scoring companies. This may make obtaining loans in the future more difficult and more expensive.

In general, EIDLs between $25,000 and $200,000 did require collateral but generally do not require personal guarantees. That means that collateral such as inventory or business equipment could be seized in the case of a default. However, the owner’s personal assets are generally safe.

For loan amounts more than $200,000, collateral and personal guarantees were required. In this case, the owner’s personal assets such as real estate and vehicles could be seized to satisfy the loan payment.

The EIDL is a non-forgivable loan, contrary to the Paycheck Protection Program (PPP).

Are EIDL loans guaranteed? What happens if I cannot pay?

If your business cannot repay the EIDL loan the first thing you should do is determine whether your loan is in default or just delinquent. These are two different states in the life of a loan and will determine the next steps. Delinquent means that you are behind on your loan repayment. Default happens when the lender determines the business will not be able to pay the loan back.

What happens if I default?

Defaulting on a federal loan can have serious consequences. When confronted with a default or prospect of a default, it is important to contact the U.S. Small Business Association (SBA) and discuss your situation.

In case you have difficulties getting through to the SBA, consider consulting a loan attorney to explore your options.

For some business owners, filing for bankruptcy may be best course of action. In that case, working with an experienced bankruptcy attorney is crucial. It is important to remember the pandemic has created an unprecedented situation and that many other business owners are in a similar situation.

Author

Simplice Essou

Simplice Essou, CPA

Certification Consultants, Consultants, Essou, Tampa

Florida SBDC at USF
Specialty: Accounting, Business Planning, Financial Management, Startup

Simplice Essou joined the Florida SBDC at University of South Florida in March 2020 as a business consultant, bringing almost two decades of experience in accounting, finance and entrepreneurship. Essou started and managed an international consulting firm in 2008, specializing in advising African government on issues related to small-to-medium-enterprise development. Previously, he has worked for large corporations, including Bank of America, BP-Amoco, General Electric, and Lehman Brothers. These roles gave him a wide breadth of experience, including the ability to handle forecasting, analyze revenue entries, actively communicate account receivable risks, and lead day-to-day analysis and reporting for credit losses. He earned an MBA in finance from the Wharton School at University of Pennsylvania and a bachelor’s in accounting from the University of Southern Mississippi.

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https://sbdctampabay.com/wp-content/uploads/2022/11/EIDL-Payback.png 750 1420 sbdclarry /wp-content/uploads/2021/10/Locked-Host-Logos-Horizontal-USF-Small-e1635274663378.png sbdclarry2022-11-16 17:26:412022-11-16 17:28:31What happens to my EIDL loan if my business closes?

Craft a Sales Pitch That Engages Its Audience

Blog, Marketing, SBDC News

by Chrissy Jaros | September 13, 2022 It only takes seven seconds to make a first impression…count it… one…two…three…four…five…six…seven! Bang! Your target customers are impressed, right!? No? Well, let’s see what we can do about that. Most people craft their sales pitch in the classic form, offering a salutation (hello, good morning/evening/afternoon), a no-frills introduction, […]

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Understanding Touch Points: The Journey to Brand Awareness and Sales

Blog, Marketing, SBDC News

by Christine Jaros | August 30, 2022 So, what is a ‘touch point’? A touch point is any interaction, connection, contact or impression via your product/service with a potential customer. Facebook ads, postcards and email blasts are a few common examples. There are hundreds, even thousands, depending on your marketing strategy and outreach. Most marketing […]

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Carl Hadden Appointed Regional Director of Florida SBDC at USF

Blog, Human Resources, SBDC News

TAMPA, Fl. – The Muma College of Business at University of South Florida announced Carl Hadden, MBA, CME, as the new regional director of the Florida SBDC at University of South Florida. “We are excited to welcome Carl in the role as Regional Director of the Florida SBDC at USF,” GJ de Vreede, PhD, Associate […]

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An Overview of Florida Sales Taxes for Businesses

Blog, Business Essentials, SBDC News

by Simplice Essou, CPA | June 1, 2022 Florida sales tax rules may be confusing and the penalties for not following the rules can be substantial. This articles gives a brief overview of the Florida sales taxes. The Florida tax rules state that all sales are taxable unless there is an exemption that applies to […]

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https://sbdctampabay.com/wp-content/uploads/2022/06/sales-tax-overview.png 750 1420 admin /wp-content/uploads/2021/10/Locked-Host-Logos-Horizontal-USF-Small-e1635274663378.png admin2022-06-06 15:21:472022-06-06 15:21:47An Overview of Florida Sales Taxes for Businesses

Interpreting the Florida Online Sales Tax Law for Businesses

Blog, Business Essentials, SBDC News

by Simplice Essou, CPA | June 1, 2022 The recent Florida sales tax law on Internet sales has created some confusion and led to many questions for small business owners. The new law created some controversy in Florida even though in most other states online shoppers have already been paying sales taxes on their purchases. […]

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Why is Starting a Business So Hard?

Blog, SBDC News, Starting a Business

by Kurt Forster | May 24, 2022 There is a public notion that starting a business is very hard. And there are a variety of common sayings used to reinforce that idea. You may have heard such things as, “It takes money to make money,” and “It’s not what you know, but who you know,” […]

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Wanda Barton, Xtremely Clean Janitorial Services Named 2022 SBA State of Florida Woman Business Owner of the Year

Blog, Featured News, Press Releases, SBDC News

TAMPA, Fl. – The Florida SBDC at University of South Florida, in cooperation with the U.S. Small Business Administration, recognized local business owner, Wanda Barton, on May 5, as the 2022 U.S. SBA South Florida District and State of Florida Woman Business Owner of the Year. Barton is the owner of Xtremely Clean Janitorial Services, […]

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When Starting a Business, What Comes First?

Blog, Business Plans, Buying a Business, SBDC News, Starting a Business

by Kurt Forster | April 29, 2022 The question of what to do first when starting a business comes up a lot when aspiring business owners first contact the Florida Small Business Development Center. In most cases, new entrepreneurs already have a good business idea, some potential customers, plenty of planning – at least in […]

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Employee Retention Becomes Top Priority for Businesses

Blog, Featured News, Human Resources, SBDC News

by Jenee Skipper, SHRM-CP | March 28, 2022 While recruiting the best talent has been a priority for most organizations; one often overlooked task has been retention efforts, at least until now.  Since 2021, workforce shortages are of growing concern for most organizations and a recent report by Paige McAllister of Affinity HR Group revealed […]

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The Florida SBDC at the University of South Florida is a member of the Florida SBDC Network, a statewide partnership program nationally accredited by the Association of America’s SBDCs and funded in part by the U.S. Small Business Administration, Defense Logistics Agency, State of Florida, and other private and public partners, with the University of West Florida serving as the network’s lead host institution. Florida SBDC services are extended to the public on a nondiscriminatory basis. Language assistance services are available for limited English proficient individuals.

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